Procurement is the process of obtaining goods and services to meet an organization’s internal and external needs. The private sector comprises privately run organizations, and the public sector comprises organizations owned by the government at the national, state or local level. Although private and public organizations have some procurement similarities, the differences often stand out.

Funding Procurement

Organizations need enough funds to finance procurement activities and meet operational goals. Public organizations rely on federal, state or local governments for funding. This means they have little control over the procurement cycle because they have to wait for the funding institutions to collect tax revenue and disburse funds. If the disbursement of funds is delayed, they have to suspend procurement activities or delay paying suppliers for delivered goods, leading to development of poor business relationships.

Finding Suppliers

Private organizations operate under institutional policies that are often tailored to meet their business goals. They can source suppliers at will and award direct contracts without a bidding process. For example, if a private hospital wants to purchase insulin pumps, it can contact various medical device manufacturers to inquire about product quality and pricing and negotiate a potential supply deal. If private organizations choose to invite vendors to submit bid proposals, they naturally focus on awarding contracts to suppliers with favorable terms and conditions.

Contrasting Interests

Private organizations are profit-oriented and mainly focus on increasing returns for company owners or shareholders. Their procurement activities are confidential -- they operate in a competitive business environment, where sharing trading intelligence with competitors isn't advisable. On the other hand, public organizations have to assure citizens that public money is spent wisely and transparently. To achieve this, public organizations must spend more funds conducting regular internal audits to enhance regulatory compliance. Public organizations in the same industry also commonly share procurement information, such as suppliers with reliable services. Additionally, the public sector sometimes outplays the private sector when it comes to employee compensation. According to the U.S. Congressional Budget Office’s 2010 statistics, federal workers with a bachelor’s degree as the highest level of educational attainment earned an average hourly wage of $57.20, while those in the private sector with similar credentials earned $49.70.

Getting Value

Private and public organizations share a similar objective in getting value for money in all procurement activities. They focus on purchasing goods and services at the right prices and often engage in cost-reduction negotiations with suppliers. Secondly, organizations in the public and private sectors serve the public -- but differently. Public entities serve the public through provision of free or low-cost services, while private organizations do so by selling products and services at higher rates based on competition, which can lead to superior service.

About the Author

Based in New York City, Alison Green has been writing professionally on career topics for more than a decade. Her work has appeared in “U.S. News Weekly” magazine, “The Career” magazine and “Human Resources Journal.” Green holds a master's degree in finance from New York University.